<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 of 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) April 15, 1999
--------------------------
COINLESS SYSTEMS, INC.
--------------------------------------------------
(Exact name of Registrant as specified in charter)
Nevada
----------------------------------------------
(State or other jurisdiction of incorporation)
0-25127 91-1715373
------------------------ ---------------------------------
(Commission File Number) (IRS Employee Identification No.)
10601 Church Street, Suite 102, Rancho Cucamonga, California 91730
- -------------------------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (888) 222-3461
-------------------
Not Applicable
-------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
ITEM 1. Changes in Control of Registrant.
On April 15, 1999, Medical Resources Technologies, Ltd. acquired all of the
outstanding stock of DSG, Inc., a California corporation and D & J Enterprises
International, Inc., a Nevada corporation. D&J Enterprises International was
merged into Medical Resources, and DSG, Inc. is being operated as a wholly
owned subsidiary.
At that time the existing board of directors of Medical Resources
Technologies, Ltd. (the "Company") resigned, and a new board of directors was
appointed consisting of the following:
Dennis Sorenson, President and Director
Daniel C. Weiker, Director and Secretary and Chief Financial Officer
Alfred Doi, Director
The new directors, Mr. Sorenson and Weyker exchanged their existing
companies stock in exchange for 4,795,477 shares of stock of the Company. The
new directors own approximately forty-eight (48%) of the voting securities of
the Company. These shares were obtained as a result of the acquisition of DSG
and D&J by the Company.
Each of the above directors owns the following percentage of voting stock
of the Company in his own name or beneficially:
Dennis Sorenson 35%
Daniel Weyker 12%
Alfred Doi 01%
The above information was supplied by the Companies transfer agent as of
June 10, 1999.
The officers and directors as a group own approximately 48 percent of the
outstanding stock of the Company.
There is no voting trust arrangement or any arrangement as to the voting of
their shares
Mr. Sorenson is 58 years of age. He is the founder of DSG, Inc. and has
acted as its president since 1992. Prior to that time, he was employed as a
vice-president of sales for Data Recall from 1987 to 1992. From 1982 to 1986 he
was employed as the western regional manager for Data Specialties, Inc. and was
responsible for the establishment of distributor networks covering 26 states,
half of Canada and Alaska. From 1976 to 1982 he was the western regional manager
for Recognition Equipment, and prior to that was employed by Monarch Marketing,
a Division of Pitney Bowes from 1972 to 1982.
Mr. Weyker is 57 years of age. Mr. Weyker has been a director of
manufacturing operations at Raichem of San Diego from 1993 to present. From 1992
to 1993 he was director of manufacturing operations for Invitrogen Corporation
with full profit and loss responsibility, and prior to that he was with Adams
Scientific as vice-president of operations. From 1985 to 1990 he was director of
operations for Synbiotics Corporation with full profit and loss
responsibilities. He
<PAGE>
is a graduate of the University of Southern California with an M.S. in systems
management in 1973.
Mr. Doi introduced thermal imaging media in the United States for bar
coding applications. He has created and patented coating to protect images
created with the use of thermal imaging. Mr. Doi currently holds the position as
chairman for East West Marketing, Inc. located in Tipp City, Ohio. Mr. Doi is
also the president of Package Sales Company located in Irvine, California and a
member of the Board of Directors of American Coating Technology, Inc., located
in Eau Claire, Wisconsin.
There are no arrangements, known to registrant, including any pledge by any
person of securities of the registrant or any of its parents, the operation of
which may at a subsequent date result in a change in control of the registrant.
ITEM 2. Acquisition or Disposition of Assets.
The Company has acquired the stock of DSG and D&J. The financial statements
setting forth the balance sheet and profit and loss are attached as Exhibit "A".
The company acquired the rights to a patent held by D&J Enterprises
International Inc. for Ticketrak covering its rights to a cashless peripheral
device for use in gaming systems. D&J is involved in the manufacturing and
distribution of coinless systems for slot machines wherein the gaming machines
discharge a bar coded ticket that may be used in other machines equipped with
the ticketrak system without the necessity of using additional monies. The
ticket is bar coded and can be read by the ticketrack system as though the
customer was inserting cash.
The only assets acquired by the registrant are the patent, office equipment
and shop equipment for the limited production of ticketrak.
The company has just made its first sale of its product.
DSG is in the business of selling bar code equipment and supplies.
ITEM 5. Other Events.
D&J Enterprises Enterprises, Inc. was incorporated on May 6, 1996 in the
State of Nevada. It is in the business of producing devices for the gaming
industry. It has a patent on a device to be utilized in slot machines that
allows the player to receive a bar coded ticket that may be used in other slot
machines utilizing the companies device. The bar coded ticket may be used in
other so equipped machines or cashed by the casino cage. In many casino's,
especially Indian run casino's each machine produces a receipt similar to a gas
pump receipt that must be cashed after the customer leaves the machine. It
cannot be used in any other machine but must be cashed each time the player
leaves a machine or accumulate a number of vouchers and cashes them all in at
once. The company is in the final stages of testing its devices for the gaming
industry prior to the initial installation.
<PAGE>
DSG, Inc., was incorporated in the State of California on April 25, 1996.
It is in the business of selling bar coding equipment and supplies and has been
selling its product to the commercial trade ever since its inception.
Both companies have been operating out of the same location in Rancho
Cucamonga, California, and will continue to operate from the same location in
the foreseeable future.
The combined companies have twelve employees at the present time, and feel
that they will be able to continue with the same personnel in the foreseeable
future.
On August 12, 1999 the registrant officially changed its corporate name to
Coinless Systems, Inc. to more closely relate to its present business operation.
ITEM 7. Financial Statements and Exhibits.
(a) Exhibits.
---------
Exhibit Number Description
-------------- -----------
"A" Financial Data Statements of businesses acquired
for year ending December 31, 1998
(b) Pro forma financials as of December 31, 1998
(c) Agreement of Merger
<PAGE>
SIGNATURE
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, hereunto duly
authorized.
COINLESS SYSTEMS, INC.
--------------------------------
(Registrant)
Date: November 17, 1999
By: /s/ Daniel C. Weyker
-----------------------------
DANIEL C. WEYKER
Its: Chief Financial Officer and Secretary
<PAGE>
Exhibit 99.A
[LETTERHEAD OF HAROLD Y. SPECTOR APPEARS HERE]
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
of D.S.G., INC.
I have audited the accompanying balance sheet of D.S.G., Inc. as of December 31,
1998, and the related statements of operations and accumulated deficit, and cash
flows for the year then ended. These financial statements are the responsibility
of the Company's management. My responsibility is to express an opinion on these
financial statements based on my audit.
I conducted this audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provided a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of D.S.G., Inc. as of December 31,
1998, and the results of its operations and its cash flows for the year then
ended, in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 8 to the
financial statements, the Company's significant net operating loss, working
capital deficiency and net worth deficit, raise substantial doubt about its
ability to continue as a going concern. These financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
/s/ HAROLD Y. SPECTOR
Pasadena, CA
October 8, 1999
<PAGE>
D.S.G., INC.
BALANCE SHEET
December 31, 1998
ASSETS
Current Assets
Cash $ 7,976
Accounts Receivable - Trade 88,167
Other Receivable - Affiliate 259,232
Inventory 39,897
---------
Total Current Assets 395,272
---------
Fixed Assets
Office Furniture 9,568
Office Equipment 19,035
Leasehold Improvements 3,205
---------
31,808
Less: Accumulated Depreciation (21,710)
---------
Total Fixed Assets 10,098
---------
Other Assets
Goodwill, net of accumulated
amortization of $85,999 45,487
Deposits 2,034
---------
Total Other Assets 47,521
---------
TOTAL ASSETS $ 452,891
=========
The auditor's report and accompanying notes are
an integral part of the financial statements
2
<PAGE>
D.S.G., INC.
BALANCE SHEET
December 31, 1998
<TABLE>
<S> <C>
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable $ 237,545
Accrued Expenses 278,825
Income Tax Payable 800
Notes Payable, current portion 81,424
-----------
Total Current Liabilities 598,594
-----------
Long-Term Liabilities -
-----------
Total Liabilities 598,594
-----------
Stockholders' Equity
Preferred Stock, no par value; 5,000,000
shares authorized, no issued and outstanding 0
Common Stock, no par value; 15,000,000
shares authorized, 750,000 shares issued and
outstanding 2,000
Accumulated Deficit (147,703)
-----------
Total Stockholders' Equity (Deficit) (145,703)
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 452,891
===========
</TABLE>
The auditor's report and accompanying notes are
an integral part of the financial statements
3
<PAGE>
D.S.G., INC.
STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
For the Year ended December 31, 1998
SALES $1,059,758
Less: Returns and Discounts (29,089)
----------
NET SALES 1,030,669
COST OF GOODS SOLD - SCHEDULE A 572,127
----------
GROSS PROFIT 458,542
OPERATING EXPENSES - SCHEDULE B 490,726
----------
INCOME (LOSS) FROM OPERATIONS (32,184)
----------
OTHER INCOME (EXPENSES)
Interest Expense (34,616)
Penalties (29,129)
----------
Total Other Income (Expenses) (63,741)
----------
INCOME (LOSS) BEFORE TAXES (95,925)
PROVISION FOR INCOME TAXES 800
----------
NET INCOME (LOSS) (96,725)
ACCUMULATED DEFICIT
BEGINNING OF YEAR (50,978)
----------
ENDING OF YEAR $ (147,703)
==========
The auditor's report and accompanying notes are
an integral part of the financial statements
4
<PAGE>
D.S.G., INC.
COST OF GOODS SOLD
For the Year ended December 31, 1998
Schedule A
Cost of Goods Sold
Beginning Inventory $ 36,859
Purchases 563,686
Freight 10,531
Service Contracts 948
----------
612,024
Less: Ending Inventory 39,897
----------
Total Cost of Goods Sold $ 572,127
==========
The auditor's report and accompanying notes are
an integral part of the financial statements.
5
<PAGE>
D.S.G., INC.
OPERATING EXPENSES
For the Year ended December 31, 1998
<TABLE>
<CAPTION>
Schedule D
<S> <C>
Operating Expenses
Advertising $ 7,034
Automobile 21,594
Bad Debt 542
Business Meeting 1,597
Commissions 77,829
Depreciation and Amortization 32,576
Equipment Rental 954
Factoring Fees 24,796
Insurance 29,161
Legal and Professional 104,911
Miscellaneous 90
Office Expenses & Supplies 22,367
Rent 28,885
Salaries and Wages 89,366
Taxes/Other 163
Taxes/Payroll 13,615
Telephone & Communications 19,955
Travel 9,259
Utilities 6,032
---------
Total Operating Expenses $ 490,726
=========
</TABLE>
The auditor's report and accompanying notes are
an integral part of the financial statements
6
<PAGE>
D.S.G., INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
For year ended December 31, 1998
Common Accumulated
Shares Stock Deficit Total
--------------------------------------------------
Balance at Dec. 31, 1997 750,000 $2,000 $ (50,978) $ (48,978)
Net Loss for the period (96,725) (96,725)
--------------------------------------------------
Balance at Dec. 31, 1998 750,000 $2,000 $(147,703) $(145,703)
==================================================
The auditor's report and accompanying notes are
an integral part of the financial statements.
7
<PAGE>
D.S.G., INC.
STATEMENT OF CASH FLOWS
For the Year ended December 31, 1998
CASH FLOW FROM OPERATING ACTIVITIES:
Net Income (Loss) $ (96,725)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and Amortization 32,576
(Increase) Decrease in:
Accounts Receivable 112,400
Other Receivable (259,232)
Inventory (3,038)
Prepaid Expense 1,206
Increase (Decrease) in:
Accounts Payable 111,581
Accrued Expenses 121,250
Income Tax Payable 800
---------
Net cash provided by operating activities 20,818
---------
CASH FLOW FROM INVESTING ACTIVITIES 0
---------
CASH FLOW FROM FINANCING ACTIVITIES
Net Payments to Notes Payable (31,628)
---------
Net cash (used) by financing activities (31,628)
---------
NET INCREASE (DECREASE) IN CASH (10,810)
CASH AT BEGINNING OF YEAR 18,786
---------
CASH AT END OF YEAR $ 7,976
=========
SUPPLEMENTAL DISCLOSURE:
Interest paid $ 7,920
=========
Taxes paid $ 0
=========
The auditor's report and accompanying notes are an integral part of the
financial statements.
8
<PAGE>
D.S.G., INC.
NOTES TO FINANCIAL STATEMENTS
For the Year ended December 31, 1998
NOTE 1 - GENERAL
D.S.G., INC. (the "Company") was incorporated under the laws of the state
of California on April 25, 1995.
The Company is a distributor of barcode equipment and supplies.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company uses the accrual basis of accounting for financial reporting, in
accordance with generally accepted accounting principles.
Use of Estimate
The preparation of financial statement in conformity with GAAP requires
management to make estimates and assumptions that affect certain reported
amounts and disclosures. Accordingly actual results could differ from those
estimates.
Revenue Recognition
Revenue is recognized when the products are shipped.
Accounts Receivable
The Company has not established an allowance for doubtful accounts and does not
use reserve method for recognizing bad debts. Bad debts are treated as direct
write-offs in the period management determines that collection is not probable.
Bad debt expense totalled $542 for year ended December 31, 1998.
Inventories
Costs incurred for materials, technology and shipping are capitalized as
inventories and charged to cost of sales when revenue is recognized.
Inventories consist of finished goods and are stated at the lower of cost or
market, using the first-in, first-out method.
9
<PAGE>
D.S.G., INC.
NOTES TO FINANCIAL STATEMENTS
For the Year ended December 31, 1998
NOTE 2 - SUMMARY of SIGNIFICANT ACCOUNTING POLICIES (Continued)
Property and Equipment
Property and Equipment are recorded at costs, and depreciated over their useful
lives, using the straight-line methods. Repairs and maintenance charges which do
not increase the useful lives of the assets are charged to operations as
incurred.
Depreciation for years ended December 31, 1998 was $6,279.
Goodwill
Goodwill is capitalized and amortized on a straight-line basis over 60 months.
Statements of Cash Flows
The Company prepares its statement of cash flows using the indirect method as
defined under Financial Accounting Standards Board Statement No. 95. For
purposes of the statements of cash flows, the Company considers all highly
liquid investments with a maturity of three months or less to be cash
equivalents.
Income Taxes
The Company accounts income taxes in accordance with Financial Accounting
Standards Board Statement No. 109.
NOTE 3 - FACTORING AGREEMENT
The Company had a factoring agreement with Winston Financial Group, Inc. The
agreement provides that the minimum quarterly volume factoring to Winston is
$120,000. The maximum rebate available to the Company descends from 16% to 10%
and the factor fees charged on the factored and paid accounts starts from 4% up
to 10%.
NOTE 4 - OTHER RECEIVABLE - AFFILIATE
The Company had a balance of $259,232 due from a related party at December 31,
1998, and payable on demand. The balance arose from certain operating expenses
that were paid by the Company for the related party.
<PAGE>
D.S.G., Inc.
NOTES TO FINANCIAL STATEMENTS
For the Year ended December 31, 1998
NOTE 5 - NOTES PAYABLE
As of December 31, 1998, notes payable consist of following:
(a) Payable to a related party, interest
accrued at 10% per annum, due on demand. $ 7,276
(b) Payable to a related party, interest
accrued at 7% per annum, due on demand.
Convert to "MRT" stock in 1999. 10,000
(c) Payable to a related party, interest
accrued at 15% per annum, due on demand.
Convert $15,000 to "MRT" stock in 1999. 32,500
(d) Payable to a related party, interest
accrued at 15% per annum, due on demand.
Convert to "MRT" stock in 1999. 5,000
(e) Payable to a related party, interest
accrued at 15% per annum, due on demand.
Convert $7,000 to "MRT" stock in 1999. 11,620
(f) Payable to a related party, interest
accrued at 10% per annum, due on demand.
Convert to "MRT" stock in 1999. 9,067
(g) Payable to a American General, monthly payment
of $420, including interest at 13.5% per annum. 5,961
---------
81,424
Less: Current Portion (81,424)
---------
Long-Term Debt $ 0
=========
NOTE 6 - PROVISION FOR INCOME TAXES
Provision for income taxes consist of $800 minimum state franchise tax.
The Company, approximately, has net operating losses carryforward of $147,703 to
reduce future taxable income. To the extent not utilized, the NOL carryforwards
will begin to expire in 2010.
11
<PAGE>
D.S.G., INC.
NOTES TO FINANCIAL STATEMENTS
For the Year ended December 31, 1998
NOTE 7 - LEASE COMMITMENTS
The Company lease facilities on a month-to-month basis. The lease requires
monthly payments of $2,257.
Rent expense for year ended December 31, 1998 was $28,885.
NOTE 8 - GOING CONCERN
The accompanying financial statements are presented on the basis that the
Company will continue as a going concern. Going concern contemplates the
realization of assets and the satisfaction of liabilities in the normal course
of business over a reasonable length of time. As shown in the accompanying
financial statements, the Company incurred a net loss of $96,725 for the year
ended December 31, 1998, and as of that date, the Company has accumulated
dificit of $147,703, a working capital deficiency of $203,322, and a net worth
deficit of $145,703.
Management negotiated with creditors to convert the notes payable into common
stock of the Merged Company. (See Note 10). Management is also currently
involved in active negotiations to obtain additional financing and actively
increasing marketing efforts to increase revenues. The Company continued
existence depends on its ability to meet its financing requirements and the
success of its future operations. These financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
NOTE 9 - YEAR 2000
The Company believes that it has identified each of its computer systems that
will require modifications to enable it to perform satisfactorily on and after
January 1, 2000. The financial impact of making such modifications to the
Company's systems is not expected to be material to the Company's financial
position or results of operations. In addition, the Company is currently
corresponding with vendors that provide products and systems to the Company in
order to determine if such products and systems will be required to be upgraded
or replaced. Although management believes the Company has an adequate program in
place to address the year 2000 issue, the costs of upgrades to, or replacements
of, its purchased products or systems has not been determined and there can be
no assurance that the program will ultimately be successful.
12
<PAGE>
[LETTERHEAD OF HAROLD Y. SPECTOR APPEARS HERE]
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders
of D & J Enterprises International, Inc.
I have audited the accompanying balance sheet of D & J Enterprises
International, Inc. as of December 31, 1998, and the related statements of
operations and accumulated deficit, and cash flows for the year then ended.
These financial statements are the responsibility of the Company's management.
My responsibility is to express an opinion on these financial statements based
on my audit.
I conducted this audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provided a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of D & J Enterprises International,
Inc. as of December 31, 1998, and the results of its operations and its cash
flows for the year then ended, in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 7 to the
financial statements, the Company's significant net operating loss, working
capital deficiency and net worth deficit, raise substantial doubt about its
ability to continue as a going concern. These financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
/s/ HAROLD Y. SPECTOR
Pasadena, CA
October 22, 1999
<PAGE>
D & J ENTERPRISES INTERNATIONAL, INC.
BALANCE SHEET
December 31, 1998
<TABLE>
<S> <C>
ASSETS
Current Assets
Cash $ 253
Accounts Receivable - Trade 2,000
----------
Total Current Assets 2,253
----------
Fixed Assets
Automobiles 44,548
Less: Accumulated Depreciation (13,118)
----------
Total Fixed Assets 31,430
----------
Other Assets
Patent Rights, net of accumulated
amortization of $167 2,333
Deposits 1,520
----------
Total Other Assets 3,853
----------
TOTAL ASSETS $ 37,536
==========
</TABLE>
The auditor's report and accompanying notes are
an integral part of the financial statements
2
<PAGE>
D & J ENTERPRISES INTERNATIONAL, INC.
BALANCE SHEET
December 31, 1998
<TABLE>
<S> <C>
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable $ 24,674
Accounts Payable - Affiliates 259,232
Accrued Expenses 10,956
Notes Payable, current portion 53,065
----------
Total Current Liabilities 347,927
----------
Long-Term Liabilities 38,291
----------
Total Liabilities 386,218
----------
Stockholders' Equity
Common Stock, no par value; 200,000 shares
authorized, 200,000 shares issued and
outstanding 50,000
Accumulated deficit (398,682)
----------
Total Stockholders' Equity (Deficit) (348,682)
----------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 37,536
==========
</TABLE>
The auditor's report and accompanying notes are
an integral part of the financial statements
3
<PAGE>
D & J ENTERPRISES INTERNATIONAL, INC.
STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
For the Year ended December 31, 1998
SALES $ 28,945
SELLING AND ADMINISTRATIVE EXPENSES SCHEDULE A 105,840
---------
INCOME (LOSS) FROM OPERATIONS (76,535)
---------
OTHER INCOME (EXPENSES)
Interest Expense (9,718)
Depreciation and Amortization (11,411)
---------
Total Other Income (Expenses) (21,129)
---------
INCOME (LOSS) BEFORE TAXES (97,664)
PROVISION FOR INCOME TAXES -
---------
NET INCOME (LOSS) (97,664
ACCUMULATED DEFICIT
BEGINNING OF YEAR (301,018)
---------
ENDING OF YEAR $(398,682)
=========
The auditor's report and accompanying notes are
an integral part of the financial statements
4
<PAGE>
D & J ENTERPRISES INTERNATIONAL, INC.
SELLING AND ADMINISTRATIVE EXPENSES
For the Year ended December 31, 1998
Schedule A
Selling and Administrative Expenses
Accounting $ 3,000
Contract Service/Marketing 47,800
Insurance 1,018
Legal and Professional 12,364
Meals and Lodging 2,856
Rent 16,650
Salaries and Wages 15,000
Supplies/Marketing 667
Taxes/Payroll 1,581
Telephone & Communications 675
Travel 3,113
Utilities 756
----------
Total Selling and Administrative Expenses $ 105,480
==========
The auditor's report and accompanying notes are
an integral part of the financial statements
5
<PAGE>
D & J ENTERPRISES INTERNATIONAL., INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
For year ended December 31, 1998
Common Accumulated
Shares Stock Deficit Total
--------------------------------------------------
Balance at Dec. 31, 1997 200,000 $50,000 $(301,018) $(251,018)
Net Loss for the period (97,664) (97,664)
--------------------------------------------------
Balance at Dec. 31, 1998 200,000 $50,000 $(398,682) $(348,682)
==================================================
The auditor's report and accompanying notes are
an integral part of the financial statements.
6
<PAGE>
D & J ENTERPRISES INTERNATIONAL, INC.
STATEMENT OF CASH FLOWS
For the Year ended December 31, 1998
CASH FLOW FROM OPERATING ACTIVITIES:
Net Income (Loss) $ (97,664)
Adjustments to reconcile net loss to net
cash (used) by operating activities:
Depreciation and Amortization 11,411
(Increase) Decrease in:
Accounts Receivable (2,000)
Increase (Decrease) in:
Accounts Payable (191,701)
Accounts Payable - Affiliates 259,232
Accrued Expenses 10,956
---------
Net cash (used) by operating activities (9,766)
---------
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of Fixed Assets (10,817)
Increase in Intangible Assets (2,500)
---------
Net cash (used) by investing activities (13,317)
---------
CASH FLOW FROM FINANCING ACTIVITIES
Net Proceeds from Notes Payable 25,066
---------
Net cash provided by financing activities 25,066
---------
NET INCREASE (DECREASE) IN CASH 1,983
CASH AT BEGINNING OF YEAR (1,730)
---------
CASH AT END OF YEAR $ 253
=========
SUPPLEMENTAL DISCLOSURE:
Interest paid $ 5,722
=========
Taxes paid $ 0
=========
The auditor's report and accompanying notes are
an integral part of the financial statements
7
<PAGE>
D & J ENTERPRISES INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
For the Year ended December 31, 1998
NOTE 1 - GENERAL
D & J Enterprises International, Inc. (the "Company") was incorporated under the
laws of the state of Nevada on May 6, 1996.
The Company produces and sells a product known as "TickeTrak", a coinless device
to be used in the Gaming Industry.
NOTE 2 - SUMMARY of SIGNIFICANT ACCOUNTING POLICIES
The Company uses the accrual basis of accounting for financial reporting, in
accordance with generally accepted accounting principles.
Use of Estimate
The preparation of financial statement in conformity with GAAP requires
management to make estimates nd assumptions that affect certain reported amounts
and disclosures. Accordingly, actual results could differ from those estimates.
Revenue Recognition
Revenue is recognized when the products are shipped.
Accounts Receivable
The Company has not established an allowance for doubtful accounts and does not
use reserve method for recognizing bad debts. Bad debts are treated as direct
write-offs in the period management determines that collection is not probable.
There was no bad debt expense for year ended December 31, 1998.
Property and Equipment
Property and Equipment are recorded at costs, and depreciated over their useful
lives, using the straight line methods. Repairs and maintenance charges which do
not increase the useful lives of the assets are charged to operations as
incurred.
Depreciation for year ended December 31, 1998 was $11,244.
Patent Rights
Patent Rights is capitalized and amortized on a straight-line basis over 180
months.
8
<PAGE>
D & J ENTERPRISES INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
For the Year ended December 31, 1998
NOTE 4 - NOTES PAYABLE (Continued)
(g) Payable to a American General, monthly payment
of $420, including interest at 21.0% per annum. 7,586
--------
91,356
Less: Current Portion (53,065)
--------
Long-Term Debt $38,291
========
Maturities on notes payable are as follows:
December 31
-----------
1999 $ 53,065
2000 38,291
----------
$ 91,356
==========
NOTE 5 - INCOME TAX
The Company, approximately, has net operating losses carryforward of $398,682
to reduce future taxable income. To the extent not utilized, the NOL
carryforwards will begin to expire in 2011.
NOTE 6 - LEASE COMMITMENTS
The Company lease a warehouse on a month-to-month basis. The lease requires
monthly payments of $1,450.
The lease will be terminated on October 31, 1999.
Rent expense for year ended December 31, 1998 was $16,650.
NOTE 7 - GOING CONCERN
The accompanying financial statements are presented on the basis that the
Company will continue as a going concern. Going concern contemplates the
realization of assets and the satisfaction of liabilities in the normal course
of business over a reasonable length of time. As shown in the accompanying
financial statements, the Company incurred a net loss of $97,664 for the year
ended December 31, 1998, and as of that date, the Company has accumulated
deficit of $398,682, a working capital deficiency of $345,674, and a net worth
deficit of $348,682.
10
<PAGE>
D & J ENTERPRISES INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
For the Year ended December 31, 1998
NOTE 2 - SUMMARY of SIGNIFICANT ACCOUNTING POLICIES (Continued)
Statements of Cash Flows
The Company prepares its statement of cash flows using the indirect method as
defined under Financial Accounting Standards Board Statement No. 95. For
purposes of the statements of cash flows, the Company considers all highly
liquid investments with a maturity of three months or less to be cash
equivalents.
Income Taxes
The Company accounts income taxes in accordance with Financial Accounting
standards Board Statement No. 109.
NOTE 3 - ACCOUNTS PAYABLE - AFFILIATE
The Company had a balance of $259,232 due to a related party at December 31,
1998, and payable on demand. The balance arose from certain operating expenses
that were paid by the related party for the Company.
NOTE 4 - NOTES PAYABLE
As of December 31, 1998, notes payable consist of following:
(a) Payable to a related party, interest paid
monthly at 10% per annum. Convert to "MRT"
stock in 1999. $ 23,000
(b) Payable to a related party, monthly payment
of $580, including interest at 11.9% per
annum, due December 1, 2000. 31,270
(c) Payable to related party, interest paid
monthly at 10% per annum, due November 30,
2000. 9,500
(d) Payable to a related party, interest
accrued at 10% per annum, due December 31,
1998. Commencing January 29, 1999, weekly
payment of $500. Secured by a life insurance. 20,000
9
<PAGE>
Coinless Systems, Inc.
& Subsidiary
Consolidated Balance Sheet
<TABLE>
<CAPTION>
December 31, 1998
<S> <C>
ASSETS
------
Current Assets:
Cash and Equivalents $ 360,435
Deposits 4,242
-----------
Total Current Assets 364,677
Fixed Assets:
Equipment, Net of Accumulated Depreciation of $40,587 49,488
Total Fixed Assets 49,488
-----------
Other Assets:
Other Intangible Assets, Net of Accumulated
Amortization of $86,449. 48,037
Total Other Assets 48,037
-----------
Total Assets: 462,202
===========
Liabilities and Shareholders' Equity
------------------------------------
Current Liabilities:
Accounts Payable and Accrued Expenses 627,120
Notes Payable (current portion) 38,291
-----------
Total Current Liabilities 665,411
Long-Term Liabilities
Notes Payable 281,419
-----------
Total Liabilities 946,830
Shareholder Equity
------------------
Common Stock, 75,000,000 shares authorized $.001 par value, 2,447,175 shares
---------
Issued and outstanding 67,730
Additional Paid-in Surplus 1,146,033
Deficit Accumulated (1,698,391)
-----------
Total Shareholders Equity (484,628)
Total Liabilities & Shareholders Equity $ 462,202
===========
</TABLE>
<PAGE>
Coinless Systems, Inc.
& Subsidiary
Consolidated Statement of Operations
(Audited)
December 31, 1998
Revenue 1,060,589
Cost of Goods Sold 572,127
---------
Gross Profit 488,462
Operating Expenses (710,489)
---------
Operating Loss (222,027)
Other Income and Expenses
Interest Income 13,459
Interest Expense (90,853)
---------
Investment Loss (146,239)
Other Income 14,353
---------
Total Other Income (Expenses) (209,280)
---------
Net Loss (413,307)
---------
Basic and Diluted Net
Loss per share ____________
Basic and Diluted Weighted
Average Number of Common Shares Outstanding ______________
<PAGE>
CSI
STATEMENT OF CASH FLOW
FOR THE PERIOD ENDED DECEMBER 31, 1998
AUDITED
1998
---------
Cash flows from operating activities:
Net income (loss) (431,303)
Adjustments to reconcile net income to net cash
Cash provided by operating activities:
Depreciation and amortization 46,556
Investment loss 146,239
(Increase) Decrease in:
Accounts receivable 115,755
Other receivable (273,114)
Inventories (3,038)
Prepaid expenses 1,206
Advances
Increase (Decrease) in:
Accounts payable (85,259)
Accounts payable-affiliates (259,232)
Accrued expenses 158,528
Income tax payable 1,600
---------
Net cash (used) by operating activities (110,738)
Net cash provided by operating activities 20,818
Cash flow from investing activities
Decrease in loans receivable 62,232
Purchase of property and equipment (13,570)
Increase in intangible assets (2,500)
---------
Net cash provided by investing activities 59,479
Net cash (used) by investing activities (13,317)
Cash flow from financing activities
Increase in notes payable 691
Issuance of common stock 31,300
Net proceeds from notes payable (6,582)
Net cash provided by financing activities 57,057
---------
Net cash (used) by investing activities (31,628)
---------
Net increase (decrease) in cash (18,329)
Cash at beginning of year 17,040
Cash at end of year (1,289)
Supplemental disclosure:
Interest paid 13,642
Taxes Paid 0
<PAGE>
ARTICLES AND PLAN OF MERGER
OF
D & J ENTERPRISES INTERNATIONAL, INC.
A Nevada Corporation
Pursuant to Section 78.475, et seq. Of the
Nevada Revised Statutes
AND
DSG, INC.
A California Corporation
INTO
MEDICAL RESOURCES TECHNOLOGIES LTD.
A Nevada Corporation as the surviving
corporation, pursuant to Section 78.475, et seq.
Of the Nevada Revised Statutes
AGREEMENT OF MERGER, DATED THE 9/th/ Day of February, 1999, between D & J.
ENTERPRISES INTERNATIONAL, INC., a Nevada corporation and DSG, INC., a
California corporation whose addresses are 10601 Church Street, Rancho
Cucamonga, Ca. 91730, hereinafter called "FIRST PARTY" and all of the directors
thereof, and MEDICAL RESOURCES TECHNOLOGIES, LTD., A Nevada corporation whose
address is 708 East-1100 South, St. George, Ut. 84790 hereinafter called
"SURVIVOR" and all of the directors thereof, the three corporations being
hereinafter sometimes called the Constituent Corporations.
WHEREAS, the Board of Directors of each of the Constituent Corporations
deem it advisable and generally to the welfare of the Constituent that these
corporations merge under the terms and conditions hereinafter set forth, such
merger to be effected pursuant to the statutes of the State of Nevada and
California, and after they have duly approved and authorized the form of
agreement of merger, and
WHEREAS, the MRT is a corporation duly organized under the laws of the
State of Nevada having been incorporated February 25, 1991, having authorized
capital stock consisting of 75,000,000 shares all of which are of one class with
a par value of $0.001 par, per share of each, of which approximately 2,247,175
shares are issued and outstanding, and
WHEREAS, D & J is a corporation duly organized under the laws of the State
of Nevada having been incorporated May 8, 1996, having authorized capital stock
consisting of 200,000 shares of common stock with a par value of -0-, of which
200,000 shares have been issued and are outstanding, and
WHEREAS, DSG is a corporation duly organized under the laws of the State of
<PAGE>
California having been incorporated April 25, 1995, having authorized capital
stock consisting of 15,000,000 shares of common stock with a par value of -0-,
of which 750,000 shares have been issued and are outstanding, and 5,000,000
shares of preferred stock, none of which has been issued.
WHEREAS, the laws of the States of Nevada and California permit such a
merger, and the Constituent Corporation's desire to merge under and pursuant to
the provisions of the laws of the State of Nevada and California.
NOW, THEREFORE, in consideration of the promises and of the mutual
agreements and covenants herein contained, it is agreed that SURVIVORS be
merged into MRT which shall be the Surviving Corporation, and the terms and
conditions of such merger and the mode of carrying it into effect are and shall
be as follows:
1. NAME OF SURVIVING CORPORATION
-----------------------------
The name of the corporation, which is sometimes hereinafter referred to as
the Surviving Corporation, shall from and after the effective date of the
merger, be MEDICAL RESOURCES TECHNOLOGIES, LTD. The separate existence of D & J
and DSG shall cease at the effective date of the merger, except insofar as it
may be continued by law or in order to carry out the purposes of this Agreement
of Merger and except as continued in the Nevada corporation created hereby.
2. ARTICLES OF INCOORPORATION OF SURVIVING CORPORATION
---------------------------------------------------
The Articles of Incorporation of the Surviving Corporation shall be the
Articles of Incorporation of MRT as amended.
3. BYLAWS
------
The bylaws of the Surviving Corporation at the effective date of the merger
shall be the bylaws of the Nevada corporation until altered or repealed as
provided therein.
4. BOARD OF DIRECTORS AND OFFICERS
-------------------------------
The members of the Board of Directors and the Officers of the Surviving
Corporation immediately after the effective date of the merger shall be those
persons who were the members of the Board of Directors and the Officers,
respectively, of D & J immediately prior to the effective date of the merger,
and such persons shall serve in such offices, respectively for the terms
provided by law or in the Bylaws, or until their respective successors are
elected and qualified.
5. AUTHORITY TO CONDUCT BUSINESS
-----------------------------
The Surviving Corporation will conduct its business under the Nevada
articles of incorporation upon the effective date of this Agreement.
<PAGE>
The Surviving Corporation will file its application for authority to
conduct business in all of the states it plans to do business in immediately
upon completion of the merger.
6. CONVERSION OF SHARES
--------------------
The manner of converting the shares of the Constituent Corporations into
shares of the Surviving Corporation shall be set forth in this paragraph.
(a) The manner and basis of converting the shares of D & J and DSG into
shares of the Surviving Corporation shall be as follows:
Immediately upon the effective date of the merger, each share of stock of D
& J outstanding in the hands of its shareholders (being 100% of the shares of D
& J and DSG outstanding) without any action on the part of the holder thereof,
shall automatically become and be converted into common stock of MRT and the
holders of the D&J AND DSG stock shall receive sufficient stock so as to give
them sixty (60%) percent of the total issued and outstanding stock at that time,
and D & J and DSG shall thereupon be deemed for all corporate purposes (other
than the payment of dividends) to evidence the ownership of the number of fully
paid, non assessable shares of common stock of the surviving corporation to
which such shares of common stock of D & J and DSG shall have been so converted.
As additional consideration for the merger of Constituent Corporations
agreeing to the merger, MRT agrees to issue such additional shares to the
shareholders of the Constituent Corporations for a period of one-year from the
date of execution of this Merger Agreement such additional stock of Surviving
Corporation so as to maintain the sixty (60%) percent ratio until the expiration
of the one year period of time.
7. RIGHTS OF SHAREHOLDERS
----------------------
After the effective date of the merger, any holder of a certificate or
certificates which theretofore represented shares of common stock of D & J or
DSG may, but shall not be required to, surrender the same to the Transfer Agent
of the Surviving Corporation, Atlas Stock Transfer, 5899 South State, Suite 24,
Murray, Utah 84107 and shall thereupon be entitled to receive in exchange
therefore a certificate or certificates representing the appropriate number of
shares of common stock of the Surviving Corporation into which the shares of
common stock of D & J and DSG theretofore represented by such certificate or
certificates shall have been converted.
8. EFFECTIVE DATE OF MERGER
------------------------
(a) For all purposes of the laws of the State of Nevada, this Agreement and
Merger and the Merger herein provided for shall become effective and the
separate existence of D & J, except insofar as may be continued by statute,
shall cease as soon as: The Agreement of Merger shall have been adopted,
approved, signed and acknowledged in accordance with the laws of the State of
Nevada and certificates of its adoption and approval shall have been executed in
accordance with such laws; and this Certificate and Agreement of Merger shall
have been filed in the office of the Secretary of State of Nevada.
<PAGE>
For all purposes under the laws of the State of California, this Agreement
of Merger and the Merger herein provided for shall become effective and the
separate existence of DSG, Inc., except insofar as may be continued by statute,
shall cease as soon as the Agreement of Merger shall have been adopted,
approved, signed and acknowledged in accordance with the laws of the State of
California and certificates of its adoption and approval shall have been
executed in accordance with its laws; and this Certificate and Agreement of
Merger shall have been filed in the office of the Secretary of State of
California.
(b) The corporate identity, existence, purposes, powers, objects,
franchises, rights and immunities of D & J and DSG shall be terminated by the
merger hereby provided for, but the corporate identities, existence, purposes,
powers, objects, franchises, rights and immunities of "FIRST PARTY" shall be
continued in and merged into the Surviving Corporation and shall be fully vested
therein.
(c) The date upon which this Agreement is filed in the office mentioned
above and upon which the Constituent Corporations shall so become a single
corporation is the effective date of the merger.
9. AUTHORIZATION
-------------
The parties hereto acknowledge and respectively represent that this Merger
Agreement is authorized by the laws of the jurisdictions of the Constituent
Corporations and that the matter was approved at a special shareholders meeting
of the respective corporations at which the shareholders voted as follows:
<TABLE>
<CAPTION>
======================================================================
CORPORATION SHARES OUTSTANDING VOTED VOTED
FOR AGAINST
======================================================================
<S> <C> <C> <C>
D & J ENTERPRISES 200,000 200,000 -0-
INTERNATIONAL, INC.
DSG, INC. 750,000 750,000 -0-
MEDICAL RESOURCES 2,247,175 1,845,237 -0-
TECHNOLOGIES, LTD.
======================================================================
</TABLE>
10. FURTHER ASSURANCES OF TITLE
---------------------------
As and when requested by the Surviving Corporation or by its successors or
assigns, D & J and DSG will execute and deliver or cause to be executed and
delivered all such deeds and instruments and will take or cause to be taken all
such further action as the Surviving Corporation may deem necessary or desirable
in order to vest in and confirm to the Surviving Corporation title
<PAGE>
to and possession of any property of any of the Constituent Corporation's
acquired by the Surviving Corporation by reason or as a result of the merger
herein provided for and otherwise to carry out the terms hereof. D & J, DSG and
the officers and directors of the Surviving Corporation are fully authorized in
the name of the respective Constituent Corporations or otherwise to take any and
all such action.
Further, D & J represents and warrants that it holds the patent on and all
rights to the mechanical application for the slot machine operation presently
marketed by the company.
11. SERVICE OF PROCESS ON SURVIVING CORPORATION
-------------------------------------------
Nevada: The Surviving Corporation agrees that it may be served with process
in the State of Nevada in any proceeding for enforcement of any obligation of D
& J or DSG, Inc. as well as for the enforcement of any obligation of the
Surviving Corporation arising from their merger, including any suit or other
proceeding to enforce the right of any shareholder as determined in appraisal
proceedings pursuant to the provisions of the General Corporation Law of Nevada
and hereby irrevocably appoints the Secretary of State of Nevada as its agent to
accept service of process in any suit or other proceeding. Copies of such
process may be mailed to the Surviving Company's Resident Agent: Jeffrey A.
Joseph, 232 Crystal Springs Place, Henderson, Nevada 89014, or such other agent
who shall be named in the future, until further notice.
12. SHAREHOLDERS RIGHT TO PAYMENT
-----------------------------
The Surviving Corporation agrees that subject to the provisions of the
General Business Corporation Law of the State of Nevada, it will pay to the
shareholders of D & J the amount, if any, to which such shareholder may be
entitled under the provisions of the above statutes of the laws of Nevada as the
case may be.
13. ABANDONMENT
-----------
This Agreement of Merger may be abandoned (a) by either Constituent
Corporation acting by its Board of Directors at any time prior to its adoption
by the shareholders of both of the Constituent Corporations as provided by law,
or (b) by the mutual consent of the Constituent Corporations each acting by its
Board of Directors, at any time after such adoption by such shareholders and
prior to the effective date of the merger. In the event of abandonment of the
Agreement of Merger pursuant to (a) above, notice thereof shall be given by the
Board of Directors of the corporations, or abandonment pursuant to (b) above,
this Agreement of Merger shall become wholly void and of no effect and there
shall be no further liability or obligation hereunder on the part either of the
Constituent Corporations or of its Board of Directors or Shareholders.
IN WITNESS WHEREOF, each of the Constituent Corporations pursuant to
authority duly granted by its Board of Directors, has caused this Agreement of
Merger to be executed by a majority of its Directors and its President and
Secretary.
<PAGE>
The respective Directors and Officers of the Constituent Corporations do
hereby certify that the above Merger Agreement was adopted by vote of the
Shareholders of the Constituent Corporations as set forth in the above Agreement
and the said resolution has not been revoked or amended.
D & J ENTERPRISES INTERNATIONAL, INC. MEDICAL RESOURCES
TECHNOLOGIES, LTD.
By: /s/ DENNIS SORENSON By: /s/ RICHARD G. WEDIG
---------------------------- -------------------------
President President
DSG, INC.
By: /s/ DENNIS SORENSON [STAMP]
----------------------------
President
By: /s/ DARRYL DORSETT By: /s/ ROBERT BODINE
---------------------------- -------------------------
Secretary Secretary
[OFFICIAL SEAL APPEARS HERE]
<PAGE>
<TABLE>
<CAPTION>
CALIFORNIA ALL PURPOSE ACKNOWLEDGMENT
- -----------------------------------------------------------------------------------------------------
<S> <C>
State of California
----------------
County of San Bernardino
--------------
On 4-20-99 before me, /s/ Mary Ann Bergeron
------- -------------------------------------------------------------------------
Date Name and Title of Officer (e.g. Jane Doe, Notary Public)
personally appeared Darryl Delano Dorsett and Dennis Willard Sorenson
----------------------------------------------------------------------------
Name(s) of Signer(s)
OR - [X] proved to me on the basis of satisfactory evidence to be the person(s) whose name(s)
are subscribed to the within instrument and acknowledged to me that
they executed the same in their authorized capacity(ies), and that
by their signature(s) on the instrument the person(s), or the entity
[STAMP APPEARS HERE] upon behalf of which the person(s) acted executed the instrument.
WITNESS my hand and official seal.
Mary Ann Bergeron
-----------------------------------------------------------------------
Signature of Notary Public
__________________________________________ OPTIONAL _________________________________________________
Through the information below is not required by law, it may prove valuable to persons relying on
the document and could prevent fraudulent removal and reattachment of this form to another document.
Description of Attached Document
Title or Type of Document: Articles and Plan of Merger
--------------------------------------------------------------------------
Document Date: 2-9-99 Number of Pages: 6
---------------------------------------- -----------------------------
Signer(s) Other Than Named Above: 0
___________________________________________________________________
Capacity(ies) Claimed by Signer(s)
Signer's Name: Darryl Dorsett Signer's Name: Dennis Sorenson
-------------------------------- -----------------------------------
[ ] Individual [ ] Individual
[X] Corporate Officer [X] Corporate Officer
Title(s): Sec. Title(s) Pres.
--------------------------------- -------------------------------------
[ ] Partner - [ ] Limited [ ] General [ ] Partner - [ ] Limited [ ] General
[ ] Attorney-in-Fact [ ] Attorney-in-Fact
[ ] Trustee RIGHT THUMBPRINT [ ] Trustee RIGHT THUMBPRINT
[ ] Guardian or Conservator OF SIGNER [ ] Guardian or Conservator OF SIGNER
[ ] Other: ________________ Top of thumb here [ ] Other: __________________ Top of thumb here
[THUMBPRINT]
_______________________ _________________________
Signer Is Representing Signer Is Representing
DSG INC DSG INC
- -----------------------------------------------------------------------------------------------------
</TABLE>
